Euro at stake in Italian election

By Anton La Guardia in Rome

12:00AM BST 14 May 2001

EUROPEAN countries were anxiously watching the Italian general election last night amid fears that the outcome could affect the stability of the euro and the pace of European integration and again generate accusations that xenophobic groups were entering government in Rome.

Italian voters were turning out in large numbers for what was seen as one of the most important post-war elections. Many of Europe's politicians have openly taken sides in the long and bitter campaigns fought by Silvio Berlusconi, the billionaire media magnate and leader of the centre-Right House of Liberties coalition, and Francesco Rutelli, the former mayor of Rome and champion of the centre-Left Olive Tree alliance.

Lady Thatcher and the Spanish Prime Minister, Jose Maria Aznar, have backed 64-year-old Mr Berlusconi. Those publicly supporting Mr Rutelli, 46, include Chancellor Schroder of Germany, the French Prime Minister, Lionel Jospin, and the president of the European Commission, Romano Prodi.

Many economists have said Mr Berlusconi's promises of both large tax cuts and heavy spending on public works and pensions cannot be reconciled with the limits on budget deficits imposed by membership of the already enfeebled single European currency.

Mr Berlusconi has promised to respect the strictures imposed by the Maastricht Treaty. But Mr Rutelli has predicted that a victory by Mr Berlusconi would result in the expulsion of Italy, a founding member of the European Union and the fifth largest economy in the world, from the euro zone.

Mr Berlusconi's allies, including neo-fascists, will make many European countries uncomfortable. The Northern League is stridently anti-immigrant and demands a "federal" Italy. The league is also deeply suspicious of the European Union, with its leader, Umberto Bossi, saying the body is the "Soviet Union of Europe".

Louis Michel, the Belgian Foreign Minister, has called Mr Bossi a "fascist" and demanded that Italy should be isolated as Austria was after Jorg Haider's Freedom Party entered government last year.

At Mr Berlusconi's final rally on Friday night, a colleague of Mr Aznar read out a message of support from him. "As members of the same political family, our ideas and policies are in common," it said.

On the same evening, Mr Prodi, who led Italy's centre-Left to a narrow victory against Mr Berlusconi in the 1996 election, appeared during a television talk show featuring Mr Rutelli and said: "I send my best wishes to Francesco."

The most vocal intervention came from Lady Thatcher, whose portrait Mr Berlusconi keeps on his desk. She said the outcry against Mr Berlusconi from leading European newspapers amounted to "character assassination" and an unjustified attempt to "bully" the Italian electorate.

When the foreign media began to take notice of Mr Berlusconi - and the fact that he was still the subject of several corruption inquiries - the tycoon complained of being the victim of an international Left-wing plot led by, among others, The Economist and the Financial Times.

Gianni Agnelli, the Fiat boss, complained that Italy was being treated like a "banana republic". But in the past week the foreigners have become an intimate part of the election. Some Italians have even begun to take pride in the fact that others are taking their country's politics seriously.

"The reasons for the interest of the foreign press are understandable, justified and, all in all, positive," wrote Sergio Romano, a former ambassador to Moscow, in the daily Corriere della Sera. "It shows that we are all in the same boat and that nothing that happens in one European country can be ignored by the others."

For most of the past half-century Italian elections have been stultifying and dull. The outcome was always a certainty - a government led by the Christian Democrats in coalition with minnows to keep the large Communist Party out of power.

After the partial re-ordering of Italian politics with the end of the Soviet Union and the corruption investigations of the 1990s, there is now a real contest - Left versus Right, with two obvious opponents of the sort foreigners can understand.

There is, above all, the extraordinary figure of Mr Berlusconi, a born salesman and television showman, who has galvanised the centre-Right with his own party, Forza Italia! (Go Italy!), following the collapse of the Christian Democrats.

In a race of image over substance, the election has become a referendum on Mr Berlusconi, his suitability for office, his virtual monopoly of private television networks and his choice of allies.

Mr Berlusconi has so far survived trials on corruption charges but faces several more investigations. He will also have to give evidence at the trial on Mafia-related charges of one of his senior lieutenants.

Mr Berlusconi has refused to debate directly with Mr Rutelli, deeming him a "puppet" of the Democratic Left, the reformed Communists. Instead they gave separate television interviews on Friday night.

Mr Berlusconi promised vaguely to settle the "conflict of interests" issue - how to separate his business interests from the business of government - within 100 days of being elected. Mr Rutelli said the centre-Left would be able to manage reforms without conflict with the unions, and insisted he had "clean hands".

He seized on his opponent's Thatcherite pretensions to claim that a victory by Mr Berlusconi would mean mass job losses, more expensive health care, and tax cuts that would benefit only the richest few. "He is taking money from Donald Duck to give to Uncle Scrooge," he said.